* Euro falls for sixth consecutive day to $1.3260
* Greece downgraded, deficit worse than feared
* Greek CDS at new high, Greek/German yield spread widens
* U.S. jobless claims, housing data lift dollar (Adds quote, details, updates prices, changes byline)
By Wanfeng Zhou
NEW YORK, April 22 (Reuters) - The euro fell on Thursday to a near one-year low against the U.S. dollar after the European Union said Greece's budget deficit was worse than feared and Moody's cut its rating of Greek government debt.
The euro declined for a sixth straight session to $1.3260 as spreads between Greek and German bond yields hits its widest in 12 years and the cost of insuring Greek debt from default surged to record highs. [ID:nLDE63L1S7], [ID:nLDE63L1ZE]
Markets grew increasingly impatient for a resolution to Greece's debt crisis even as the country started talks with European Union and International Monetary Fund over the details of a plan that could provide 40-45 billion euros of aid.
Investors bet the country would need a bailout to avoid restructuring its debt or defaulting. Athens will have to refinance 8.5 billion euros ($11.3 billion) of bonds maturing on May 19.
"There's lingering uncertainty over the ability of European policymakers to act quickly on their previous agreement," said Todd Elmer, currency strategist at Citigroup in New York.
"There remains some concern that Greece may be unable to meet its financing needs and this is reflected in the widening that we've seen in terms of interest rate spreads between Greece and Germany," he added.
The euro
The euro had already been under pressure in the European session after the European Union's statistics office said it had revised Greece's 2009 budget deficit to 13.6 percent of gross domestic product from 12.7 percent.
While Greece is still on pace to meet its 2010 deficit reduction target, the upward revision means the country may have to accelerate its deficit-cutting efforts over the next two years, said the European Commission, the EU's executive body. See [ID:nLDE63L12B].
The single euro zone currency dropped 0.4 percent to 124.21
yen
Moody's Investors Service downgraded Greece's sovereign rating by a notch to A3 and placed the rating on review for a further possible downgrade, citing the risk that Greece may end up paying a lot more for its borrowing than initially thought. See [ID:nLDE63L28G].
The Moody's ratings cut overshadowed news earlier in the session that Greece may get a short-term bridge loan from European countries, according to a Greek government source. See [ID:nATH005396]
"There's a lot of concern that these types of things (bridge loan) are just band-aids that do little other than buy time," said Mike Malpede, currency analyst at Easy Forex in Chicago.
A Reuters poll of around 50 economists gave a median 80 percent chance that Greece would turn to its euro zone partners in the next two months and activate its aid package. Looking further ahead, forecasters gave roughly a one-in-four chance that Greece would default on its debt obligations in the next five years. For more, see [ID:nLDE63J232]
In the United States, data showing a fall in jobless claims and an increase in existing U.S. home sales further boosted the dollar versus the euro.
The reports reinforced the view that the U.S. economy is on a steady path to recovery and outperforming Europe. For more, see [ID:nnN22397444].
"The dollar is getting a nice benefit from U.S. data today," said Joe Manimbo, currency trader, Travelex Global Business Payments in Washington. "That's helping to contrast with the debt worries in the euro zone, resulting a a broadly stronger dollar."
The ICE Futures' dollar index <.DXY>, a gauge of the
greenback's value against six major currencies, rose 0.5
percent to 81.548. Against the yen